Business Case Studies, Mergers, Acquisitions and Takeovers Case Study, ITC's Acquisition of WIMCO, The Turnaround Challenges

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Mergers, Acquisitions and Takeovers Case Study

Case Title:

ITC's Acquisition of WIMCO: The Turnaround Challenges

Publication Year : 2005

Authors: Krishna Chaitanya, T. Phani Madhav

Industry: Conglomerates

Region:India

Case Code: MAA0040

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Indian Tobacco Company, popularly known as ITC, is the market leader in the tobacco industry in India. Ever since its inception, it focused on diversifying into other unrelated businesses that further intensified in the mid-1990s as a result of growing awareness among consumers about the harmful effect of tobacco and cigarettes. As a part of its diversification strategy, ITC also made its entry into the matchstick industry in 2002; and acquired the West Indian Match Company (WIMCO), the Indian subsidiary of Swedish Match AB, which was the largest mechanised manufacturer of match boxes in India with a market share of 13%. But during the time of acquisition, WIMCO was in losses. This helped ITC in acquiring WIMCO at a lower price than the industry expectations. However, after the acquisition, ITC is confronted with the issue of turning around WIMCO.

Pedagogical Objectives:

  • To focus on the business diversification strategies of ITC and its entry into the match stick industry
  • To discuss the challenges faced by ITC in turning around WIMCO.

Keywords : Indian matchstick industry; Indian Tobacco Company’s (ITC) acquisition of West Indian Match Company (WIMCO); Turnaround challenges; Restructuring / Turnaround Strategies Case Study; ITC’s diversification; Synergies of acquisition

Contents : 
Introduction
The ITC Group & Business Diversification
Entry of ITC into Matchstick Industry
Match stick Industry in India – The Backdrop
Handmade Small Scale Sector
Mechanized Large-Scale Sector
ITC’s Acquisition of Wimco
History & Evolution of ITC’s Businesses – Events in Order

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